Consumables #6: If Businesses Can’t Handle the Heat, Get Out of the ACCC’s Kitchen

Consumables is LegalVision’s weekly update on all things competition and consumer law. The update follows the activities of the national regulator, the Australian Competition and Consumer Commission (ACCC) – and keeps you informed about key developments relating to the Competition and Consumer Act 2010 (CCA) and the Australian Consumer Law (ACL).

The ACCC had a busy week issuing eleven press releases, which included the following highlights:

A Public Warning Notice about online retailer, Lux International Sales ApS (trading as LuxStyle). The Danish e-tailer allegedly sent unsolicited goods to customers with an invoice demanding payment.

The ACCC is commencing legal proceedings against German car company, Audi, in the Federal Court. The ACCC alleges that Audi engaged in misleading and deceptive conduct, incorrectly marketing their vehicles as environmentally friendly and providing low emissions.

The ACCC issued Hoyt’s Food with a $10,800 penalty for a misleading ‘oregano’ labelled product that wasn’t solely oregano.

The ACCC filed a cross-appeal against the online game retailer, Valve in relation to the Federal Court’s decision in March 2016.

Public Warning About Demands for Payment on Unwanted Goods

The ACCC issued LuxStyle a Public Warning Notice after receiving 127 complaints since January 2017.

LuxStyle required prospective customers to input a mailing and email address to view the prices of products on their site. Customers complained that even though they did not proceed to order or purchase the good, they received the items at their mailing address along with an invoice demanding payment. Some customers even reported that LuxStyle engaged debt collectors to follow up their payment. Customers in Europe, New Zealand and Canada have also made similar complaints.

Under the Australian Consumer Law (ACL), it is an offence to ask for payment for unsolicited goods and services (i.e. goods or services that a recipient has not requested). A breach can result in a business paying a pecuniary (financial) penalty (currently $220,000 for an individual to $1.1 million for a company).

If you receive any unwanted goods, ensure you first contact the supplier to let them know you never requested nor purchased the items and that the supplier can recollect them from a particular address.

ACCC Files Against Audi in the Federal Court

The ACCC has initiated proceedings in the Federal Court against Audi AG (German company), Audi Australia Pty Ltd (the Australian subsidiary) and their parent company, Volkswagen Aktiengesellschaft (“VWAG”). The ACCC alleges three breaches of the ACL regarding the company’s diesel vehicle emissions claims:

misleading and deceptive conduct;

making false or misleading representations; and

engaging in conduct liable to mislead the public.

You may recall that in September 2015, the Environmental Protection Agency found Volkswagen had fitted many of its cars with ‘defeat’ software in the diesel engine. Defeat software could detect when a car was being tested and change the vehicle’s performance accordingly to improve results. Volkswagen has admitted that it supplied more than 12,000 affected vehicles in Australia.

The ACCC is now seeking the following:

declarations,

pecuniary penalties,

corrective advertising, and

orders relating to future representations of facts and costs.

The ACCC is bringing these proceedings alongside those it instituted on 1 September 2016 against VWAG and its Australian subsidiary, Volkswagen Group Australia Pty Ltd relating to the same alleged conduct. The ACCC’s eighteen-month pursuit of Audi demonstrates the regulator’s commitment to address misleading statements about goods sold to consumers.

Hoyt’s Food Faces the Heat Over Misleading Spice Labelling

In November 2016, the ACCC initiated an investigation into businesses who had misrepresented their oregano products including Aldi brand Stonemill, Menora and Hoyt Food Manufacturing Industries Pty Limited (trading as Hoyt’s Food).

The retailer’s packaging clearly suggested that the product was either wholly oregano or contained only a small amount of trace ingredients other than oregano. However, the ACCC’s tests revealed that the herb packet contained only half of the promised ingredient, while the other half was olive leaf.

The regulator since issued Hoyt’s Food an infringement notice for false and misleading representations under the ACL and the brand paid a penalty of $10,800. Although an infringement notice does not mean that the individual or business has admitted fault, the Commissioner noted that Hoyt’s Food is taking steps to change their supply arrangements, and will test their oregano products in the future.

Suppliers have an obligation to ensure they accurately label the ingredients in their product. They should also take care to verify any representations they make on their packaging that they approve.

(Video) Game On

The ACCC has filed a cross-appeal against online game retailer, Valve in relation to the Federal Court’s decision. Valve operates Steam, a game distribution platform.

In March 2016, the Federal Court found that certain terms and conditions in Steam’s Subscriber Agreements were false and misleading. Interestingly, Justice Edelman ruled in his decision that some statements that Valve made in online chats to individual consumers were not misleading partially because the consumers had asserted their rights under the ACL.

The Court ordered in December 2016 that Valve pays $3 million in penalties.

The grounds of the ACCC’s cross-appeal are against two of the Court’s findings that Valve’s statements were not misleading:

The Steam customer representatives did not mislead customers through their representations, nor were they likely to mislead customers.

The representations Steam made were not the same as those the representations that the ACCC pleaded.

Notably, the decision in Valve is the first time courts have extended the definition of ‘goods’ to include ‘computer software’ in the ACL.

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Finally, in our last edition of Consumables, we explained that the ACCC was considering whether to cap sales commissions on insurance add-ons at car dealerships. The Regulator has decided there will be no cap on commissions.

Questions? Get in touch with our consumer lawyers and feast on some more tasty morsels in next week’s Consumables.